UK mid-market firm ECI will sell what was its first defence industry investment, Racal Acoustics, for £115 million (€122 million; $170) to aerospace company Esterline.
The sale of the company, which makes specialist hearing protection and communications products for military and avionics applications, is expected to complete in January.
ECI backed the company’s £52 million management buyout from JF Lehman & Co in 2005. Since 2004, Racal Acoustics has grown profits by nearly 150 percent, the company said.
“The current climate is clearly more challenging for private equity generally both in buying and selling businesses,” Ken Lindsay, director of ECI, said in a statement. “However, the sale of Racal Acoustics shows that the private equity model can continue to deliver strong business performance and good investment returns for investors even in tougher times so long as a rigorous approach to business assessment and development is followed by private equity houses with the courage of their convictions, the ability to get the right deals done in the current environment, and the skills to add genuine value to their investees.”
Hawkpoint advised ECI on the sale.
The UK private equity firm has had a busy close to the year. Last week it offered to pay £33 million in a take-private for healthcare technology firm Ascribe. The week prior it closed its ninth private equity fund on £430 million.